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8. Let us see how a tariff might work. Let us suppose that the United States puts a 25% tariff on every automobile part that

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8. Let us see how a tariff might work. Let us suppose that the United States puts a 25% tariff on every automobile part that comes from Mexico. That means a part increases in price from $100 per part to $125 per part. What is likely to happen? 1. First, the car companies will need to pay more for parts, so what will they need to do to the price of an American car? 2. Now, the Japanese car companies do not have to pay more for parts, so for cars manufactured in Japan, which country has the cheaper car? 3. If people buy the cheapest car for their money, what car will American consumers buy? 4. Will America sell more, pr fewer cars manufactured in America? 5. Is the American automobile worker better or worse off

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